This invention relates generally to electronic commerce and more particularly to the conducting of an interactive reverse auction over a computer network.
Reverse auctions have traditionally taken the form of the distribution of documents such as a Request for Information, Request for Quotation, Request for Proposal, and/or a Specification to entities that may have an interest in bidding to provide goods and services at a competitive price. In contrast with the typical xe2x80x9cforwardxe2x80x9d auction, the dimensions for selecting a winning bidder are typically not just best price, but include a variety of additional dimensions, such as the brand and quality of the merchandise proposed, the timeliness of delivery, and the quality of service. Furthermore, what is apparently the best offer may not be the eventual winning bid. Further, the requestor of goods and services may elect to select two or more of the top bidders with whom to enter a negotiation. Thus, the winning bidder at the completion of the auction may not be the eventual winner of the business contract, although there are circumstances in which the winning bidder will be the winner of the contract. Finally, while the traditional forward auction has a centralized local point of control through which all initiatives are sourced, the reverse auction may have multiple local and remote sources from which all requests are initiated.
Traditional reverse auctions based on paper media require that formal documents be distributed on paper to prospective bidders, and that those bidders be found and identified for a period long enough prior to the close of the bidding process so that they are able to submit their bids. When a modification is made to a request, an entire round of comunications is required with paper and voice to inform the bidders of the changes. The administrative overhead for setting up and carrying out a xe2x80x9cbidxe2x80x9d is so great that only complex, xe2x80x9cbig ticketxe2x80x9d goods and services can reasonably be requisitioned using this method.
Some changes in the bidding process have made traditional reverse auctions somewhat more manageable. Requestors often create xe2x80x9cshort listsxe2x80x9d of bidders who are favored because they are known to offer good products and services at acceptable prices, or because they are anticipated to contend for the contract. Telephone, fax, and more recently e-mail have made the processes of communication faster and easier. None of these methods, however, has made it possible to conduct reverse auctions in substantially real time and to evaluate the bids rapidly upon submittal.
Bidding by mail or fax suffers a significant disadvantage for both bidder and requestor compared to bidding in person or by telephone because the mailing or faxing bidder has no chance to improve a bid (i.e. to provide more or better goods and services at a lower cost to the requesting entity) in quick response to competitive bids received from face-to-face or telephone communications. Moreover, although telephone and facsimile bidding allows the bidder to avoid travel expense and inconvenience, traditional auctions may be scheduled at inconvenient times and locations for many remote bidders. This is particularly true for reverse auctions that are conducted internationally. In an international framework, many requestors will not even know how to find prospective qualified bidders using traditional methods. In contrast, the search technologies available on the World Wide Web will allow such bidders to find the requestor auction site if the requestors invest minimal effort to identify themselves and their characteristics to the search engines that are available.
All of these limitations and disadvantages of traditional reverse auction bidding processes, even when bidding by telephone, facsimile or e-mail is permitted, serve to discourage or altogether eliminate a large number of bidders and ultimately cause an increase in selling prices and a decrease in competition to provide the highest reasonable quality and quantity of goods and services, to the economic detriment of both requestor and seller.
A recent innovation in sales has been to use the Internet""s World Wide Web facility to post descriptions, often including pictures that depict goods and services, and to show the current pricing for those items. These systems are automated and capable of accepting an order from a customer by having that customer fill out an on-line order form and/or use graphical methods to place items in a xe2x80x9cshopping cart.xe2x80x9d This ordering information is then taken by the system and placed into an on-line order database or accounting system which then completes the order. Such systems, at heart however, sell goods and services only at a fixed price, and do not offer goods and services for competitive bidding and negotiation. Such systems do not dynamically modify prices in an interactive manner in response to bids and other market conditions such as supply and demand.
Another recent innovation in sales has been to use the Internet""s World Wide Web facility to post descriptions, in principle including pictures that depict goods and services, and to show the constraints on bidding for those items in a xe2x80x9cforwardxe2x80x9d auction. The auctioneer may own the items directly, or may serve as an agent for the owners of goods and services that are offered. These systems are automated and capable of accepting a bid from a customer by email, by telephone or facsimile, by mail, or by having that customer fill out an on-2line bid form. This bidding information is then taken by the system and placed into a bid database and a winner is selected based on a high bid. Such systems, however, sell only goods and services, that are what the seller wishes to offer, rather than the ones that the requestors wish to request.
Security brokerage firms for years have used automated transaction systems for matching buy and sell orders for securities. For example, NASDAQ""s SOES (Small Order Execution System) system offers complete electronic matching of buyers and sellers. This system, however, does not operate an auction. It merely pairs buy orders with sell orders when the pricing criteria of both sides of the trade are met.
It remains desirable to conduct a reverse auction over a computer system.
It is an object of the present invention to provide a method and apparatus to process and transmit electronic reverse auction information.
It is another object of the present invention to provide a method and apparatus to securely receive bids electronically from a plurality of proposers, and to rank the received bids using a plurality of criteria and to electronically provide resulting information to requestors and bidders.
It is another object of the present invention to provide a method and apparatus for conducting a Web-based reverse auction.
The problems of conducting a reverse auction over a computer network are solved by the present invention of a system for processing and transmitting electronic reverse auction information.
The present invention provides, in a computer network enabling communication between a host computer and a plurality of remote bidders, or between a peer computer and a plurality of peer bidders, a system and method for transmitting and processing reverse auction information implemented as a computer program within the network and the computers on which the program operates, comprising posting means for posting information across the network, the information being descriptive of a request and/or specification of goods and services to be purchased, bidding means available to the bidders for submitting a plurality of proposals across the network in response to the request and/or specification, the bids including financial information, a description of the goods and services to be provided, information about the bidder including one or more pointers to bidder addresses such as an email address and a World Wide Web address, receiving means for receiving the plurality of bids sent across the network by a plurality of proposers, security means for allowing access to only designated request and bid information by those with authorized access, evaluation means for ranking bids received in accordance with financial and an unspecified number of other qualitative and quantitative dimensions, and displaying means for providing relevant information to requestors and to bidders.
The present invention further provides, in a computer network enabling communication between a host computer and a plurality of remote computers, or in a peer computer network enabling communication between one peer computer and a plurality of other peer computers, a reverse auction information and processing system implemented as a computer program within the host and network (or within selected peer or peers and the network) comprising a request and/or specification database in communication with the auction host computer system for storing information about requests and/or specifications, such information being descriptive of a request and/or specification of goods and services to be purchased, a bid database in communication with the auction host computer system for storing information about responses to requests and/or specifications, such bids including (but not limited to) financial information, a description of the goods and services to be provided, information about the bidder including one or more pointers to bidder addresses such as an email address and a World Wide Web address, a reverse auction engine in communication with the request database and the bid database, and a security manager that allows requestors to designate whether a request shall be generally available and to designate the parties who shall have access to bid on it, and a Display System that displays selected information from the request database and the bid database to appropriate requestors and bidders so that the bidders are encouraged to compete in an open marketplace and the requestors may witness the bidding and alter the environment of that bidding before and during the time of the competitive bidding process.
A primary advantage of this system is that it results in greater value for requestors, as well as greater sales and broader distribution for sellers who are prepared to be competitive in their offerings. By incorporating an auction format which is available to a wide audience by electronic means, the inventive system results in more bidders, greater response, and hence lower costs and greater value for the requestor. Because this electronic system reaches a geographically diverse audience, requests become visible in areas where they are not ordinarily available for suppliers to notice them and respond to a request, resulting in increased supplier response without significant increase in purchasing costs. As general knowledge of the requisition site grows, business grows. Furthermore, the electronic auction system is substantially automatic, requiring personnel only to negotiate if such is required as an additional process after the winners are determined, to establish the conditions under which each particular reverse auction will be operated and evaluated, and to review and modify the qualitative judgments made by the auction engine in evaluating proposals. Therefore, many suppliers can concurrently respond to a multiplicity of requests, thus providing a dramatic reduction in costs associated with operating a procurement effort in a reverse auction format. Indeed, it would not be possible to operate an equivalent twenty-four hour per day, seven-day per week procurement auction with an unlimited number of requests and potentially thousands if not millions of proposers without such an inventive electronic reverse auction method and system.
The present invention together with the above and other advantages may best be understood from the following detailed description of the embodiments of the invention illustrated in the drawings, wherein: